Midday Market Roundup for Thursday, May 29, 2025

Good afternoon. Here are the top four global financial and economic topics shaping markets at midday, Thursday, May 29, 2025:

1. U.S. Court Blocks Trump’s Sweeping Tariffs, Markets Rally

The global markets experienced a significant surge following the U.S. Court of International Trade's ruling that President Donald Trump's attempt to impose sweeping “Liberation Day” tariffs on imports from countries with trade surpluses against the U.S. was beyond his authority. This decision, which the White House may appeal to the Supreme Court, not only halted the implementation of these tariffs but also instilled optimism that the administration might reconsider its aggressive trade stance. The market responded with a shift towards riskier assets, leading to a 1.9% rise in Japan’s Nikkei, a 1.5% climb in the S&P 500 futures, and a 1.8% jump in Nasdaq futures. The ruling also strengthened the dollar against major currencies and pushed the 10-year Treasury yield up to 4.52%, as the likelihood of an imminent Federal Reserve rate cut diminished (Reuters, Chicago Tribune, Times of India).

2. Tech Stocks Soar on Nvidia’s Strong Earnings and AI Optimism

Nvidia’s impressive earnings report and optimistic forecast played a pivotal role in the rally of technology shares. The company's stock surged over 4% in after-hours trading, fueled by robust demand for its AI chips and a promising revenue projection for the current quarter. This positive momentum not only lifted Nvidia but also had a ripple effect on other chipmakers, such as Advanced Micro Devices and Broadcom, and tech giants like Apple, Meta, and Alphabet. As a result, the Nasdaq is on track for its best monthly performance since November 2023, with the S&P 500 and Dow Jones also posting substantial gains for May (Reuters, Bloomberg, CNBC).

3. U.S. GDP Contracts in Q1 as Imports Surge Ahead of Tariffs

The U.S. economy experienced a contraction at an annualized rate of 0.2% in the first quarter of 2025, the first such decline in three years. This shrinkage, as per revised Commerce Department data, was primarily due to a surge in imports as companies rushed to stockpile goods ahead of the anticipated tariffs. Consumer spending also saw a sharp decline, and analysts predict that the drag from imports might ease in the second quarter, potentially leading to a GDP rebound. The S&P 500, while still about 4% below its all-time high, has shown significant recovery from its April lows (Times of India, Reuters).

4. Tariff Policy Uncertainty and Inflation Risks Remain

While the court ruling provided temporary relief, significant uncertainty persists. The Budget Lab at Yale notes that even with some tariffs invalidated, the average effective U.S. tariff rate remains at its highest since 1969, and price levels are up 0.6% from all 2025 tariff actions. The Federal Reserve’s latest meeting minutes highlighted concerns that inflation could be more persistent than anticipated due to tariff-driven price increases. The odds of a Fed rate cut in July have dropped to 22%, with September now seen as the more likely window for policy easing. Markets are also watching for updated GDP and inflation data, as well as further policy signals from the White House and the courts (Budget Lab at Yale, Reuters, Chicago Tribune).

Sources:
Reuters: https://www.reuters.com/world/china/global-markets-wrapup-1-2025-05-29/
Chicago Tribune: https://www.chicagotribune.com/2025/05/29/wall-street-trump-tariffs/
Times of India: https://timesofindia.indiatimes.com/business/international-business/us-stock-market-today-may-29-dow-jones-nasdaq-sp-500-wall-street-court-ruling-weakens-trumps-tariff-authority-nvidia-earnings/articleshow/121493329.cms
Bloomberg: https://www.youtube.com/watch?v=9hotMeL7EJ4
Budget Lab at Yale: https://budgetlab.yale.edu/research/state-us-tariffs-may-29-2025
CNBC: https://www.cnbc.com/2025/05/28/stock-market-today-live-updates.html

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